RF's Financial News

Sunday, March 27, 2016

Happy Easter.Easter is one of those holidays that emphasize:
“Things are not always what they seem.”

On Tuesday, ISIS struck
the Brussels airport and metro station. By
noon, it was estimated that 30 people had died, and 200 were injured. The
natural reaction was a ‘sealing of borders’, and a labeling of the refugees as a
‘Jihad Invasion force’.After all, 72%
of the refugees are male, between the ages of 19 and 35, and presumably leaving
their wives and children behind for a better life.In fact, just this week Victor Orban (the
Prime minister of Hungary) stated: “Europe
is no longer free because freedom begins with speaking the truth. Today in Europe:

-It is forbidden to say that those arriving are not refugees, but an
invasion that brings crime and terror to our countries.

-It is forbidden to point out that this is not an accidental chain of
consequences, but a preplanned and orchestrated operation.

-It is forbidden to say that in Brussels they are scheming to transport their
foreigners over here as quickly as possible.

-It is forbidden to point out that the purpose of settling people here
is to reshape the religious and cultural landscape of Europe, to reengineer its
ethnic foundations, and to eliminate the final barrier to internationalism.

-It is time for us in Europe to wake up to the lies, and to take back our
individual nations.”

All of this violence and
rhetoric beg question: Who’s paying for all of this?If we think that it’s ISIS – then let’s freeze
their bank accounts and cut off their source of funds (presumably oil) before
we have another Brussels on our hands.Heck
if we can break into an iPhone – we can … oops, sorry we can’t do that
yet.Well, I did ask a couple computer
guys I know, and they gave me directions.And then I asked Siri and she told me: “(a) tap
the Emergency Call button on the lock screen, (b) then, enter "####",
(c) as soon as you enter "####" tap the dial button, (d) immediately,
press the lock button which is on top of the iPhone, (e) now you are back into
your iPhone – enjoy.”But that all
seems too easy, what am I missing?

In another equally ‘weird’
turn of events, the Wall Street Journal reported (http://www.wsj.com/articles/navinder-sarao-faces-u-s-extradition-1458738749)
that Mr. Navinder Sarao could face extradition to the U.S.Mr. Sarao was the trader who (from his parents'
home in west London) has been accused of stock market manipulation.Presumably he (single-handedly) caused an
$800B stock market flash-crash in the fall of 2010.Mr. Sarao (37 years old) faces 22 counts of
wire fraud, commodities fraud, spoofing (buying or selling with the intent of
cancelling the transaction), and general market manipulation.These charges carry a maximum sentence of 380
years in prison. If these actions of a
single individual (Mr. Sarao) sound ‘astonishing’ and ‘outlandish’ to you –
they do to SF and myself as well. Putting
aside the gentleman’s guilt or innocence for a moment – I am being asked to
believe that:

-Mr. Sarao amassed
an individual fortune (of over $50M in 5 years) - trading stocks on a computer
in his parents’ house – under a Heathrow flight path.

-This 37-year
old traded remotely (and without relationships) on an exchange that he had
never seen.

-He
single-handedly out-smarted one of the most highly computerized exchanges in the
world. On this exchange, ‘High-Frequency
Programs’ (HFPs) pick up
the slightest movement in price – jump in front of the trade – and take
advantage (millions of times) of these small price differences.

So they’re asking me to
believe that one gentleman, operating from his parents’ house in west London –
with at most $50M at his disposal – caused an $800B flash crash.That seems like a stretch – even on
Easter.Which begs the question: Who’s
benefiting by Mr. Sarao’s indictment?What am I missing?

Ms. Yellen,
it’s holidays like Easter where we get
to ‘pull back’ and remember that ‘rich’ and ‘wealthy’ are just outcomes, describing
different behaviors that require different journeys.‘Wealthy’ describes a process that can be diligently
learned and followed.‘Rich’ describes a
more personal journey – often involving loved ones. ‘Rich’ often encompasses taking some time for
yourself and ‘smelling the roses’. As
the old adage says, when you DO look back – it WON’T be that one great trade you’ll
remember.Happy Easter – celebrate the
day.

The Market:

Yesterday was the lowest
volume day of the year. The 2nd
lowest volume day occurred the day before yesterday, and the 3rd
lowest was the day before that.Last
week (if you take out Friday’s options expiration), we had more ‘low volume’ days
due to corporations being forbidden from buying back their own stock – 5 weeks
ahead of their earnings announcement.Yet this market has held up remarkably well.That’s because it’s actually easier for
‘them’ to hold up the market when the volume is low, because ‘they’ can goose
the market higher by buying relatively few shares, or with a few well-timed
futures buys.

In fact, on
Thursday the market was in a foul mood
with the DOW down over 100 points and the S&P quickly falling toward its
200-day moving average. But ‘they’ were NOT going to let us take that
feeling into a 3-day weekend.Sure
enough, things started inching higher, and by the closing bell the DOW was
GREEN by 13.

So we just had our first RED
week out of the last 6. Does it mean
anything, or was that just some profit-taking after one of the biggest short
squeeze run-ups in years? Frankly, it
doesn't mean anything. While this market
belongs thousands of points lower, seeing it dip a bit after a massive run-up
means nothing. What we need to ask is:
Will it hold at these levels? The 200-day moving average on the S&P
is at 2016. The S&P closed on
Thursday at 2035. So, as long as we
remain above that 200-day moving average, we can feel reasonably sure we will
trade sideways and choppy. If however
the S&P were to go below that 2016 level, it could start a significant
amount of short selling and push us lower.

At this point, our entire
economy is geared toward pushing the markets higher. Wall Street loves it.Central Banks require it.And people enjoy it.But when markets rise for the wrong reasons,
they always end up with a sharp and painful correction or crash. This market (in particular) has risen for the
wrong reason, and each day brings us one step closer to that inevitable rug
pull.

I think that this week, we
trade sideways and choppy as they try and defend that 200-day moving average
level.Remember, without the help of
sustained, stock buy-backs, we could ultimately fail the 2016 level on the
S&P, and see a series of tests lower. When we fail 2016 on the S&P, the next
stop would be the S&P 2000 level.

TIPS:

I am:

-Long various mining stocks: AG, AUY, EGO, GFI, IAG, and FFMGF,

-Long an oil supplier: REN @ $0.56,

-Long GLD – Apr – Call Debit Spread – 118 / 123,

-Long NKE – Apr – Call – 67.5,

-Long POT – Stock & Apr – Call 20,

-Long SBUX – Apr – Call – 55,

-Sold SPX – Apr1 – Call Credit Spread – 2055 / 2060,

-Sold TEX – Apr – Put Credit Spread – 19 / 20

To
follow me on Twitter.com and on StockTwits.com
to get my daily thoughts and trades – my handle is: taylorpamm.

Please
be safe out there!

Disclaimer:

Expressed
thoughts proffered within the BARRONS REPORT, a Private and free weekly
economic newsletter, are those of noted entrepreneur, professor and author,
R.F. Culbertson, contributing sources and those he interviews. You can learn more and get your free
subscription by visiting: <http://rfcfinancialnews.blogspot.com> .

Please
write to Mr. Culbertson at: <rfc@culbertsons.com> to inform him of any
reproductions, including when and where copy will be reproduced. You may use in
complete form or, if quoting in brief, reference <rfcfinancialnews.blogspot.com>.

If
you'd like to view RF's actual stock trades - and see more of his thoughts -
please feel free to sign up as a Twitter follower - "taylorpamm" is the handle.

If
you'd like to see RF in action - teaching people about investing - please feel
free to view the TED talk that he gave on Fearless Investing: http://www.youtube.com/watch?v=K2Z9I_6ciH0

Views
expressed are provided for information purposes only and should not be
construed in any way as an offer, an endorsement, or inducement to invest and
is not in any way a testimony of, or associated with Mr. Culbertson's other
firms or associations. Mr.
Culbertson and related parties are not registered and licensed brokers. This message may contain information
that is confidential or privileged and is intended only for the individual or
entity named above and does not constitute an offer for or advice about any
alternative investment product. Such advice can only be made when accompanied
by a prospectus or similar offering document. Past performance is not indicative of
future performance. Please make sure to review important disclosures at the end
of each article.

Note:
Joining BARRONS REPORT is not an offering for any investment. It represents
only the opinions of RF Culbertson and Associates.

PAST
RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS
THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING
ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER
VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE
INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT
TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES,
AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN
ONLY TO THE INVESTMENT MANAGER.

Alternative
investment performance can be volatile. An investor could lose all or a
substantial amount of his or her investment. Often, alternative investment fund
and account managers have total trading authority over their funds or accounts;
the use of a single advisor applying generally similar trading programs could
mean lack of diversification and, consequently, higher risk. There is often no
secondary market for an investor's interest in alternative investments, and
none is expected to develop.

All
material presented herein is believed to be reliable but we cannot attest to
its accuracy. Opinions expressed in these reports may change without prior
notice. Culbertson and/or the staff may or may not have investments in any
funds cited above.

Remember the Blog: <http://rfcfinancialnews.blogspot.com/>
Until next week – be safe.

Sunday, March 20, 2016

“If the FED says it will do one thing under certain conditions, and
doesn’t end up doing it… does it have a credibility problem?” … Steve Liesman of CNBC

Ms. Yellen:

I assume last
Wednesday you had a darn good reason for flip-flopping on your stance surrounding
raising interest rates?When CNBC’s
Steve Liesman started off the Q&A session with: “Madam Chair, inflation has
gone up the last two months. We had
another strong jobs report. The
forecasts for GDP have returned to two percent. And yet you stood pat on
interest rates … Does the FED have a credibility problem when it says it will
do one thing under certain conditions and doesn’t end up doing it?And frankly, if current conditions are not
sufficient for the Fed to raise rates, what would those conditions ever look
like?”

Honestly, your 261 word jumbled, James
Joyceian stream of consciousness, high-end econ-babble answer was completely
non-understandable – which is what I assume you wanted.But let’s discuss a couple of myths:

-Myth #1: Many
people believe that the Federal Reserve is somehow a Federal Agency - FALSE.

-Myth #2: Many
people believe that we actually need a Federal Reserve (a non-elected band of banksters)
to oversee the economy – FALSE.

-Myth #3: Many
people believe that the United States always had a Federal Reserve – FALSE.

-Myth #4: “Let us
control the money of a country, and I care not who makes its laws"…Mayer Rothschild – TRUE (said in 1838).

Ms. Yellen, there’s something inherently flawed when an un-elected group
(The Federal Reserve) was created on a holiday evening in 1913 for the purpose
of ‘smoothing out economic booms and busts’ – and then not immediately being FIRED
for allowing the ‘Great Depression’ of 1929 to occur.Instead, your powers were increased and now
you are allowed to conjure up ‘money’ out of thin air, and loan that same money
(with interest) to our Government.And
most recently lie to the U.S. economy when in December of 2015 – you proclaimed
(after the first interest rate hike in 10 years): “If data supports it, there
will be 4 additional rate hikes in 2016.”Unfortunately for you, the most recent data confirms that we are running
on all cylinders with 4.9% unemployment and less than 2% inflation.BUT we have a problem with your ‘oath of
transparency’ to ‘not surprise’ the markets.What kind of transparency do you think you are showing when you (a) lay out a plan for 4
(data-dependent) rate hikes, (b) receive (and brag about) the corroborating
data, and then (c) give the U.S. economy the ‘middle finger’ and whisper ‘ha-ha
I tricked you’.

So what was it that turned you around? Was it the most recent G20 meeting, where you secretly
agreed to keep U.S. policies more in line with what the rest of the global central
bankers were doing? After all, Sweden, Denmark, the ECB, Switzerland, and
Japan are actually operating with NEGATIVE interest rates. The U.S. is almost alone in having a slightly
positive rate. So it would be easy to
think that you decided that the U.S. should not hike rates while the world cuts
theirs. OR was it when the Obama/Hillary crusade said to you: ‘We're
coming into election time, and we want a nice strong market to prove that the our
policies are working.You will NOT hike
rates or do anything else to cause this market to fall’. I think it was the
second option.After all, Obama has
slowly been circling the wagons for Hillary.Hillary isn’t getting the support that Obama got, and he’s taken it upon
himself to campaign for her and to tell the FED to save the market for her.

My hope was that somehow fiscal sanity would prevail, and our FED would
ignore all of the ‘noise’ and hike rates so that millions of savers could
finally get a tiny return on their savings. I was hoping that maybe our FED had seen the folly
of subprime mortgages and subprime auto loans, and were ready to at least try
and clean up their act. But all we saw was a group desperate to save
their own jobs, and a President equally desperate to keep the economic illusion
alive – one that starts and stops with the stock market.All of the FED members do not support a
Republican agenda, and as President Reagan once said: “You gotta dance with the
one that brung ya!” Meaning that you will
most likely continue to lean Dovish, and keep the market aloft as we head into
November.

The reality is you can’t really raise rates, stop buying bonds, stop
buying mortgage back securities, or shrink the money supply – because if you
did, the FED led recovery would quickly send the economy in to a recession. Having lost the economy, the stock market is
now your economy. Your job is to keep the
stock market propped up at any cost – as it is the only part of the economy
that you can control. But that begs the question – can you rig the stock
market forever?

The Market....

Factually:

-4.9% of the population is unemployed as long as you don’t
count the 100 million are not in the workforce and the 50 million on food
stamps,

-50% of all of the hires during this recovery are
part-time workers, with bartenders and waitresses making up the majority,

I was ready for our FED to announce another quarter point hike in
June.But, I also believe that when the global
community couldn't convince them otherwise, Obama/Hillary stepped-up to the
plate and told them not to do anything ahead of this election that would harm
the stock market – otherwise – they’re fired.But this still begs the question: Is our FED capable of pushing the
market to new highs?I don’t think
so.Japan and the ECB both have negative
rates and their major index and the DAX are still 3,000 points below their
respective 2014 highs.So, keeping rates
‘equal to or less than’ zero does NOT seem to keep stocks moving higher.

Now, directly following the FED announcement on Wednesday, the dollar
index dropped like a rock – helping to drive the equity, bond, and commodity
markets higher. I’m wondering:

-How much of our equity rally is based upon recent strong
earnings and fundamental expectations versus the FED’s more dovish stance?

-If the U.S. dollar can find a bottom and begin to
rebound?

-If the U.S. dollar continues to fall (effectively
lowering prices on U.S. goods overseas), should we expect a significant
reduction in the number of multi-national earnings warnings going forward?

Unfortunately (once again), this all comes down to the FED and not real
economics or fundamentals. After all, the
big run up from February’s lows came on the heels of 2 things: 1st the
FED played the oil futures market, and rescued oil prices.This allowed the banks to renegotiate some of
the completely underwater fracking and drilling loans that were imploding on bank’s
balance sheets.And 2nd we had
just come through a period of record stock buy backs. Corporations are still taking advantage of
borrowing money at zero and buying back their own stock – all with the goal of
boosting their own stock price and dramatically increasing their own executive’s
compensation packages.

For example: during the past 7 weeks private investors have pulled money
out of stocks in record numbers. Last
week alone, investors sold $3.7B worth of stock. But in what can only be called ‘almost’ record
numbers, corporations bought back their own stock in numbers not seen since
2007. The S&P estimates that in this
quarter alone, almost $165B worth of corporate buy-backs are in the works.Therefore,
all of the private sector selling (to exit the market) was met directly by corporate
buying.

But here's the rub, for the next 6 weeks – companies (going into their
earnings quiet period) are not going to be able to buy back their own stock. My feeling was that if Ms. Yellen had talked
about hiking rates in April or June, coupled with the ending of corporate
buy-backs – we were set-up for a substantial fall.Now with Ms. Yellen waffling on her rate
hikes and her dovish tone – we’ve got a split field.Do we go higher on the heels of a quiet FED –
OR do we trade sideways and down because the biggest buyer in the market isn't
going to be there?

I think we go sideways and lower. We may pop higher for another day or two, but
I don't think we will rally with enough volume required to break us out of the
substantial overhead resistance that exists starting at 2050 on the S&P.In the past couple of weeks, we've come up over
220 S&P points (with Janet’s ‘about face’ giving us the last 40 points).We are over-bought, over-extended,
over-priced and desperately in need of a pull back. Between the most incredible
Political season of my life, and the ‘End-game’ situation of our economy,
there's certainly no shortage of excitement lately. Take care and be safe.

TIPS:

If you haven’t heard the CNBC interview with Curly Haugland – a senior
GOP official, moaning about the whole idea of people voting at primaries – it’s
definitely worth a listen.In a
disgusting display of hubris, he virtually said that people should shut up and
"let the party nominate the candidate". He then went on to say
that the voting is a dog and pony show, and the Convention will appoint whom
THEY determine to be their man. He then said that he didn’t care if millions
or even record numbers of people pull the switch for Trump, because the people
do NOT have the right to appoint the nominee. Finally when asked: “Isn't the
party made up of those millions of people? Shouldn't their desires be
heard?" His answer was a definitive – “NO”:http://www.cnbc.com/2016/03/16/we-choose-the-nominee-not-the-voters-senior-gop-official.html

I’m still watch the following indicators:

-The Russell Small Cap Index (RUT) – for general market
order flow in the equity markets.

-And the Bond Yield (TNX) – the 10-year yield will reflect
a FED rate hike expectation. If we see
yields move up, then the bond market is expecting a Fed rate hike.

I am:

-Long various mining stocks: AG, AUY, EGO, GFI, IAG, and FFMGF,

-Long an oil supplier: REN @ $0.56,

-Long GLD – Apr – Call Debit Spread – 118 / 123,

-Long NKE – Apr – Call – 67.5,

-Long POT – Stock & Apr – Call 20,

-Long SBUX – Apr – Call – 55,

-Sold SPX – Mar4 – Call Credit Spread – 2040 / 2045,

-Long SPX – 2010 – Mar4 / + April Calendar spread,

-Long SPX – 2030 – Mar4 / + April Calendar spread,

-Long SPX – 2050 – Mar4 / + April Calendar spread,

-Long SPX – 1900 / 1925 / 1975 Apr Butterfly

-Sold TEX – Apr – Put Credit Spread – 19 / 20

To
follow me on Twitter.com and on StockTwits.com
to get my daily thoughts and trades – my handle is: taylorpamm.

Please
be safe out there!

Disclaimer:

Expressed
thoughts proffered within the BARRONS REPORT, a Private and free weekly
economic newsletter, are those of noted entrepreneur, professor and author,
R.F. Culbertson, contributing sources and those he interviews. You can learn more and get your free
subscription by visiting: <http://rfcfinancialnews.blogspot.com>
.

Please
write to Mr. Culbertson at: <rfc@culbertsons.com> to
inform him of any reproductions, including when and where copy will be
reproduced. You may use in complete form or, if quoting in brief, reference
<rfcfinancialnews.blogspot.com>.

If
you'd like to view RF's actual stock trades - and see more of his thoughts -
please feel free to sign up as a Twitter follower - "taylorpamm" is the handle.

If
you'd like to see RF in action - teaching people about investing - please feel
free to view the TED talk that he gave on Fearless Investing: http://www.youtube.com/watch?v=K2Z9I_6ciH0

Views
expressed are provided for information purposes only and should not be
construed in any way as an offer, an endorsement, or inducement to invest and
is not in any way a testimony of, or associated with Mr. Culbertson's other
firms or associations. Mr.
Culbertson and related parties are not registered and licensed brokers. This message may contain information
that is confidential or privileged and is intended only for the individual or
entity named above and does not constitute an offer for or advice about any alternative
investment product. Such advice can only be made when accompanied by a
prospectus or similar offering document. Past performance is not indicative of
future performance. Please make sure to review important disclosures at the end
of each article.

Note:
Joining BARRONS REPORT is not an offering for any investment. It represents
only the opinions of RF Culbertson and Associates.

PAST
RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS
THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING
ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER
VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE
INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT
TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES,
AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN
ONLY TO THE INVESTMENT MANAGER.

Alternative
investment performance can be volatile. An investor could lose all or a
substantial amount of his or her investment. Often, alternative investment fund
and account managers have total trading authority over their funds or accounts;
the use of a single advisor applying generally similar trading programs could
mean lack of diversification and, consequently, higher risk. There is often no
secondary market for an investor's interest in alternative investments, and
none is expected to develop.

All
material presented herein is believed to be reliable but we cannot attest to
its accuracy. Opinions expressed in these reports may change without prior
notice. Culbertson and/or the staff may or may not have investments in any
funds cited above.

Remember the Blog: <http://rfcfinancialnews.blogspot.com/>
Until next week – be safe.

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